HOA Fees: What Are They And What Do They Cover?

Homeowners who live in a community with a homeowners association (HOA) will likely pay HOA fees, which help fund the association’s projects and maintenance costs. If you’re thinking of buying a home with an HOA, it’s important to understand how HOA fees may be used in your neighborhood and how much they could potentially cost you.

What Are HOA Fees?

HOA fees (sometimes called HOA dues) are monthly, quarterly or annual charges that HOA members pay to their local HOA. This expense helps cover the cost of maintaining shared amenities and ensuring upkeep of community buildings in the neighborhood, similar to how condominium and co-op communities charge their residents.

Since an HOA is a nonprofit organization, association members – usually homeowners who live in the community – share the responsibility of enforcing HOA rules and bylaws and managing common areas. HOA fees make this possible by funding the association’s initiatives.

How Much Are Average HOA Fees?

The national average monthly HOA fees are around $243, according to the 2023 U.S. Census Bureau’s American Housing Survey, though the median monthly fee is significantly lower at $83.

Depending on your neighborhood, your HOA fees can vary widely based on cost of living, cost of real estate, state laws, local laws and what amenities and services your HOA offers.

HOA dues can also depend on the type of property you own. For instance, a single-family home may have higher HOA fees than a condo, and a co-op may have higher fees than a condo association. Keep in mind that the survey referenced above rolls HOA and condo association fees together in one statistic.

What Do HOA Fees Cover?

As previously mentioned, HOA fees generate the income needed to create and maintain the community’s amenities, but they’ll typically be used for more administrative purposes, too.

Here’s a list of what expenses are covered by the HOA fees you pay:

• Civic services: Some HOA dues help cover the cost of trash removal, snow removal, pest control, lawn care, landscaping, utilities and security.
• Shared area maintenance: The expenses associated with maintaining shared areas – such as swimming pools, fitness centers, clubhouses, tennis courts and outdoor dining spaces – are funded by HOA payments.
• Community services: Many high-end HOAs offer amenities that include valet services, concierge or on-site fitness centers. These extras are managed and paid for by your association.
• Liability insurance: HOAs are required to purchase insurance coverage for any injuries that could occur on community property. Homeowners will still need to get their own insurance policy, though.

Before you buy a home connected to an HOA, you should take the time to research the HOA’s  covenants, conditions and restrictions (CC&R) along with its amenities. This extra step will guarantee you understand what’s allowed in the community and the services that are available to homeowners.

Additional HOA Fees

There may be certain cases where you make additional payments to your HOA. These can include the following:

• Special assessments: An HOA may periodically require residents to pay “special assessments” to help cover expensive repairs or nonroutine maintenance when their reserve funds run low. Special assessments are typically only imposed following natural disasters or excessive property damage.
• Fines: Failure to comply with the rules of your HOA can result in you paying a fine. Your community’s CC&R should outline the potential fines and amounts you’ll pay upon a violation. Fines can go beyond just neighborhood conduct; you can be fined for simply painting your home the wrong color.

How Are HOA Fees Paid?

You can make your HOA fee payments online, in person or by mail using cash, checks or credit cards. In most cases, your HOA dues won’t be included in your monthly mortgage payment. That’s because your fees will go directly to your HOA and not your mortgage servicer.

In some cases, your mortgage lender may set up a separate escrow account for the purpose of paying for HOA dues.

Are HOA Fees Tax Deductible?

Unfortunately, for most homeowners, HOA fees aren’t tax deductible unless your house is used as a rental property. In that case, the HOA payments you make could be deducted as a business expense.

Can HOA Fees Be Waived?

If you’re moving into a new home with an HOA, you’ll most likely have to pay fees. If the HOA is a voluntary association, you could opt out and avoid the fees. However, this may mean you won’t have access to shared areas, such as a community swimming pool or clubhouse.

What Happens If You Don’t Pay Your HOA Dues?

Failure to pay mandatory community association fees can result in suspended privileges, late fees, legal actions and even a lien. While HOAs can’t evict you the same way a property owner can evict a tenant, in some states, the HOA can repossess the home through the foreclosure process if a homeowner doesn’t pay their fees for an extended period.

The Bottom Line

HOA fees are often a necessary expense if you buy a home connected to a homeowners association. Although pricey in some cases, these payments are intended to carry out several functions, which include helping ensure that members of a community enjoy shared amenities in well-maintained areas.

If you’re thinking of purchasing a home in an HOA community or anywhere else, you can start the mortgage process today with Rocket Mortgage^®.